Columbian Financial Corporation et al v. Stork et al

Filing 115

ORDER denying 106 Motion to Stay Discovery. Signed by Magistrate Judge K. Gary Sebelius on 1/5/2018. (wh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
COLUMBIAN FINANCIAL
CORPORATION,
Plaintiff,
v.
MICHELLE W. BOWMAN, in her
official capacity as Bank Commissioner
of Kansas, et al.,
Defendants.

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Case No. 14-2168-SAC

ORDER
This matter comes before the court upon defendants’ Motion for Stay of Discovery (ECF
No. 106). For the following reasons, this motion is denied.
I.
In their motion, defendants seek to stay discovery pending resolution of their motion for
summary judgment. Defendants initially contend that their motion for summary judgment will
likely resolve the remaining claim here. They assert that discovery is not necessary for the
resolution of the motion for summary judgment, and discovery on all issues posed by the
complaint would be wasteful and burdensome. Plaintiff counters that defendants have failed to
offer any good reason to depart from the general rule that discovery should not be stayed pending
a dispositive motion. Plaintiff suggests that the arguments raised by defendants in the summary
judgment motion consist “largely of arguments presented to and passed over by the Court in
Defendants’ prior motions to dismiss.”

II.
This case has a tangled background. Some review of that background is necessary to put
the instant motion into proper perspective. Plaintiff Columbian Financial Corporation (“CFC”)
is a Kansas for-profit corporation and was the sole shareholder of Columbian Bank and Trust
Company (“bank”). Columbian Bank is a state-chartered bank in the State of Kansas. In 2008,
the Office of the State Bank Commissioner of Kansas (“OSB” or “bank commission”) declared
the bank insolvent, seized the bank’s assets and appointed the Federal Deposit Insurance
Corporation as receiver. The FDIC then sold many of the bank’s assets. CFC sought judicial
review of the OSB’s actions in Kansas state court. The Kansas trial court remanded the petition
to the bank commission for a post-seizure hearing. The OSB eventually granted summary
judgment against CFC and Columbian Bank. CFC and the bank then filed a new petition for
judicial review in the Kansas courts. The trial court dismissed the action as moot, and CFC and
the bank appealed.
Before the Kansas Court of Appeals (“KCOA”) issued a decision, CFC and the bank filed
this action on April 10, 2014. CFC and the bank asserted claims against the OSB and several
current and former officials of the OSB. CFC and the bank alleged denial of due process under
42 U.S.C. § 1983 when the OSB seized the bank’s assets and appointed the FDIC as a receiver
after declaring the bank insolvent. CFC and the bank sought equitable remedies and damages.
Judge Crow eventually ordered dismissal, relying on Younger abstention and qualified
immunity.1 CFC appealed this decision.

1

Columbian Financial Corp. v. Stork, 2014 WL 6472862 (D. Kan. Nov. 18, 2014).

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While the appeal in this case was pending, the KCOA found in favor of the bank
commission.2 The KCOA determined that CFC and the bank failed to meet their burden of
proving the invalidity of the Commissioner’s action under Kansas law. In sum, the
Commissioner was authorized to declare the bank insolvent, to take charge of the Bank and all of
its assets, and to appoint a receiver. CFC and the bank filed a petition with the Kansas Supreme
Court for review of the KCOA’s decision, which was later denied.
In light of the decision by the KCOA, the Tenth Circuit affirmed in part and vacated in
part the decision by Judge Crow.3 The Court found that Younger abstention did not preclude
CFC from prosecuting its equitable claims in federal court in light of the termination of the state
administrative proceedings. The Court also held that Judge Crow had properly determined that
the individual defendants were entitled to qualified immunity on CFC’s claims for damages.
On remand, CFC filed an amended complaint, naming only the current bank
commissioner and deputy bank commissioner as defendants. CFC alleged that defendants seized
the bank and its assets without providing CFC with an opportunity to be heard in a meaningful
manner, in violation of its Fourteenth Amendment right to due process. CFC sought a judgment
in its favor and against the defendants, an injunction requiring a hearing to determine the injuries
it has suffered, attorneys’ fees and the award of any other relief deemed just and proper.
Judge Crow dismissed the complaint as barred by sovereign immunity.4 Regarding Ex
parte Young, the court held that CFC failed to allege an ongoing violation of federal law, nor did
it pray for prospective injunctive relief. The court stated: “With the Bank and its assets no

2

Columbian Bank & Trust v. Splichal, 329 P.3d 557, 2014 WL 3732013 (Kan.App. July 25, 2014).

3

Columbian Financial Corp. v. Stork, 811 F.3d 390 (10th Cir. 2016).

4

Columbian Financial Corp. v. Stork, 216 F.Supp.3d 1267 (D. Kan. 2016).

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longer in existence, the plaintiff does not articulate what prospective injunctive relief could offer
a remedy to past injuries.” Thus, the court concluded that the only relief was “a declaratory
judgment that the defendants violated [its] due process rights years ago.” Judge Crow held that
such a claim was barred by the Eleventh Amendment.
On appeal, the Tenth Circuit reversed and held that Ex Parte Young did not bar CFC’s
due process claims.5

The Court further held that CFC’s claims were not moot.

Following remand, CFC named the current bank commissioner and the position of deputy
bank commissioner as defendants. Defendants then moved for summary judgment, and filed the
instant motion to stay discovery. In the motion for summary judgment, defendants contend that
the 2014 decision by the KCOA bars CFC’s claims through the doctrines of res judicata,
collateral estoppel, and law of the case.
III.
The decision to stay discovery is firmly vested in the sound discretion of the trial court.6
Nevertheless, the Tenth Circuit has warned that “‘the right to proceeding in court should not be
denied except under the most extreme circumstances.’”7 To that end, as a general rule, courts in
the District of Kansas do not favor staying pretrial proceedings even though dispositive motions
are pending.8 However, it is appropriate to stay discovery pending resolution of a dispositive
5

Columbian Financial Corp. v. Stork, 702 Fed.Appx. 717 (10th Cir. 2017).

6

Kutilek v. Gannon, 132 F.R.D. 296, 297 (D.Kan.1990).

7

Afshar v. Unites States Dep't of State, No. 06–2071, 2006 U. S. Dist. LEXIS 52435, at *2 (D.Kan. July 18,
2006)(citing Commodity Futures Trading Comm’n v. Chilcott Portfolio Mgmt., Inc., 713 F.2d 1477, 1484 (10th
Cir.1983)).
8

Wolf v. U.S., 157 F.R.D. 494, 494 (D.Kan.1994).

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motion where “the case is likely to be finally concluded as a result of the ruling thereon; where
the facts sought through uncompleted discovery would not affect the resolution of the motion; or
where discovery on all issues of the broad complaint would be wasteful and burdensome.”9
IV.
After a careful review of the history of this litigation and the defendants’ motion for
summary judgment, the court has determined that discovery should not be stayed. The court
does not find that defendants have overcome the application of the usual policy in this district
concerning discovery. The great weight of authority is against granting a stay of discovery, even
when a dispositive motion is pending. Defendants have suggested that their motion for summary
judgment would completely resolve this case. The court recognizes that defendants have made
some persuasive arguments in their motion for summary judgment, but the court is unable to
predict how Judge Crow will resolve it. The court does not believe that additional discovery is
necessary for a decision on the motion for summary judgment, but the court is also not persuaded
that further discovery will be wasteful or burdensome. Accordingly, given the general rule
disfavoring the stay of discovery, out of an abundance of caution, and in its discretion, the court
will not stay discovery here simply because the pending motion for summary judgment may not
need further discovery. Defendants’ motion to stay discovery is denied. The court will enter a
scheduling order based upon the scheduling conference that occurred on December 18, 2017.
IT IS THEREFORE ORDERED that defendants’ motion for stay of discovery (ECF
No. 106) is hereby denied.
IT IS SO ORDERED.

9

Kutilek, 132 F.R.D. at 298; Wolf, 157 F.R.D. at 494.

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Dated this 5th day of January, 2018, at Topeka, Kansas.

s/ K. Gary Sebelius
K. Gary Sebelius
U.S. Magistrate Judge

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